Plans to sell to the private sector the state-run United Coconut Planters Bank (UCPB) may have to wait until the government finds a way to recover or dispose of its investments in the bank.
Dominguez told reporters that the government was still evaluating how it could dispose of its stake in UCPB.
“You see the situation in UCPB: the government has supported it for so many years,” Dominguez said.
“In fact, we still have P42 billion with them. So the question is, how is it best for us to recover the P42 billion plus all the cost of money of that P42 billion all these years?” he added. “Is it through privatization or another means?” Dominguez said, adding that government investments in the bank could have reached P100 billion.
Dominguez said “there are many other alternatives than privatization,” without elaborating.
The finance chief said he already tasked the state-run Philippine Deposit Insurance Corp. (PDIC) with calculating the total amount of funds that the government poured into UCPB.
“We haven’t come up with the final amount, but it’s large,” he said.
Dominguez said “if you sell it, essentially you are telling the Filipino public ‘well, sorry you lost the difference.’”
“As chief financial officer of the country, I’d like to get back everything that we have there—that’s the goal,” he said. “Now, how do we do it? Is it through privatization or other means? I’m pretty sure that privatizing it is not going to do it.”
In 2015, the Privatization and Management Office (PMO) “temporarily suspended” the planned sale of the government’s controlling stake in UCPB through a scheme that will require the winning bidder to not only acquire the government equity but also infuse fresh capital into the bank.
The Department of Finance (DOF)-attached agency that disposes of public assets had required recapitalizing UCPB by at least P15 billion through subscription to up to 37.2 billion primary common shares, as well as called for the outright purchase of at least 1.106 billion common shares held by the government or 73.9 percent of the bank.
The floor price had been set at P1 per share, hence requiring a total investment of at least P16.1 billion.
The PMO had received 12 letters of intent from local and foreign banks as well as private equity firms eyeing to buy UCPB.
In a text message on Monday (Aug. 5) PDIC president Roberto B. Tan said the government had provided UPCB capital and income support as well as regulatory relief under the financial assistance package it got in 2008.
“The original financial assistance package was amended in 2008. The loan assistance of P20 billion was converted to P12 billion of capital notes and P8 billion of purchase-of-assets without buyback,” Tan said.
According to Tan, capital loans can be bought back once there’s a buyer; the assets that cannot be bought back, meanwhile, were already almost settled with the PDIC.
On top of the P20-billion PDIC assistance was P30 billion in income support through deposits from the Bureau of the Treasury, Tan said.
The government ended its support to UCPB in 2017./TSB